Bristol, in a news release issued late Tuesday, called on ImClone's top executives to step down temporarily while the drug titan takes control of the Food and Drug Administration approval process for Erbitux. The FDA on Dec. 28 refused to accept ImClone's marketing application for the drug, saying ImClone provided too little data to even consider it.

The FDA's refusal touched off a cascade of woes for ImClone, including a plummeting stock price, dozens of class action lawsuits filed by angry shareholders and the launching of three federal investigations looking into investor fraud allegations. Bristol has written off $735 million of its 4-month-old investment and has been questioned about the amount of due diligence it conducted before agreeing to the deal with ImClone.

On Sept. 19, the pharmaceutical giant paid $1 billion for a 19.9 percent stake in ImClone, valuing the New York City-based biotechnology company at $71 a share. ImClone's stock was trading at around $18 a share in after-hours trading Tuesday.

Bristol also paid ImClone an additional $200 million for co-marketing rights to Erbitux. And Bristol promised to pay another $300 million to ImClone when the FDA accepted the biotechnology company's application to sell Erbitux and an additional $500 million once the agency approved the drug for market.

On Tuesday, Bristol also demanded that ImClone give it greater flexibility to sell the biotechnology company's stock.

ImClone CEO Sam Waksal and his brother, chief operating officer Harlan Waksal, have been the target of increasing criticism and are accused by shareholders and analysts of hiding the extent of the FDA's concerns with Erbitux. Both have denied the allegations and have said they've publicly disclosed the FDA's major concerns immediately after receiving the agency's refusal-to-file letter.

Officials with both companies could not be reached for comment Tuesday.

"We are taking this action because we believe Erbitux has great potential to treat cancer patients and we want to move the process forward as quickly as possible," Bristol CEO Peter Dolan said in the press release.

"The issue with ImClone is credibility," said Jason Zhang of Stephens Inc. "Presumably, Bristol-Myers should know what its doing. Certainly, there are people at Bristol-Myers who know more about the FDA process than people at ImClone."